Wednesday, 28 March 2012

EU internet roaming charges to be slashed

From 1 July this year using a mobile phone to surf the web in another EU country will be about 70% cheaper, following an agreement on rate caps reached today by European Parliament and member state negotiators.

For the first time, the EU roaming caps will limit the rates phone companies can charge you for using the internet in a different EU country. The cost per downloaded megabyte will be capped at 70 cents as of 1 July 2012, 45 cents in 2013 and 20 cents as of 1 July 2014. The current average cost of roaming within the EU is €2.23 per megabyte.

The EU first started limiting the rates EU carriers could charge for roaming within the EU back in 2009, limiting the charge for making calls to 45 cents a minute. That cap has steadily decreased over the past three years, and today's agreement will lower them a further 20% from the current 35 cents to 29 cents, dropping to 19 cents in 2014. Before then, it used to cost an average of €1.50 per minute to make a call elsewhere in the EU. Now, for the first time, internet usage will be capped as well.

Of course this only applies to people with an EU phone carrier. So if you're travelling to Europe from the United States, you'll still pay the high fees.

The Commission views the exhorbitant (and entirely arbitrary) costs companies charge within the common market to be a hindrance on the 'freedom of movement' guaranteed to EU citizens under the treaties. The idea is not for the EU to be engaged in price-setting for this industry but instead to correct a market failure and force EU phone carriers to establish the pan-EU networks that their counterparts in the United States did in the early 2000s.

When mobile phones first came out in the US people's home areas usually included only their own states and some neighboring areas. So a New Yorker had to pay roaming fees to use their cell phone in California. But then the carriers decided to open their entire networks to their customers. That hasn't happened with pan-European carriers like T-Mobile, Vodaphone or Orange - leading many to suspect market collusion. All it would take is one large carrier to open their services and soon all others would have to follow, making them lose out on those lucrative roaming fees on which they can make up to 99% profit (it costs them virtually nothing to connect the call within the single market).

The idea of the EU caps is to stimulate the development of a market for roaming, in which carriers actually compete with each other to provide their customers with the best deals. The goal is to make roaming charges within the EU a thing of the past by 2015. The legislation agreed today will force carriers to allow their customers to choose a seperate company with a seperate contract for roaming, while still keeping the same number while abroad. The customer's phone would automatically switch to the other carrier when they go abroad, but they would keep the same number and sim card. They would then receive a separate bill from their 'roaming carrier'.

Though the roaming caps first got a rough ride from industry-tied MEPs when they were first proposed, particularly from British Conservative MEPs, there were signs today that the political tide has turned. The European Conservatives and Reformists, the Eurosceptic group of Conservative MEPs set up by David Cameron four years ago, even issued a press release today praising the agreement.

"It is outrageous that consumers are still paying exorbitant prices when using their phone abroad," said Tory MEP Giles Chichester. "Many consumers are still scared to use their phone for simple pleasures like checking websites or using phone apps. Mobile roaming charges are being forced down but it it regrettable that it always requires EU legislation, rather than action from the industry itself."

It would appear the Tories have come a long way from attacking the plans as a 'self-beneficial gift to Eurocrat fat cats' as Syed Kamall branded them in 2009. But will the mobile companies finally read the writing on the wall?

1 comment:

Europeans for Fair Roaming said...

Hi, have you heard about the citizens' Europeans for Fair Roaming ( where we fought for lower roaming charges in Europe for the last years? We have been quite successful in bringing prices down even more than originally planned but things are not perfect yet. We are currently thinking about how to go on next...